Taming Your Company’s Most Elusive Beast

Management thinking is inherently faddish, but there are some favorite themes that never fall out of favor. Innovation is one those evergreen themes: it is a rare CEO who doesn't list innovation as one her top four or five priorities.

But innovation is an elusive beast. Setting aside a few well-known exceptions, the vast majority of established firms feel there is a big gap between their efforts and their achievements. R&D investments have been made, stage/gate processes have been built, creativity training courses have been run, and yet the outputs — exciting new products and services — don't seem to be falling into place.

So what to do? We can look to companies renowned for innovation — like Apple and Google — and try to learn from them. But that's a flawed approach. Apple and Google have innovation in their DNA; they have many years of success to build on; and they have earned the license to take some risks. So we have to be very careful in applying our learning from these two to our own companies.

I think a more useful approach is start from the principles of innovation — the underlying ideas and themes that have been identified over the years — and to see if we can find ordinary companies that are putting those principles into practice. And when I say ordinary companies, I mean established players that are trying to reinvent themselves, and also mid-sized firms that are away from the spotlight, looking for new and better ways of working. If these companies are successful, then they are likely to be much more effective role models than Apple or Google are.

So what are these principles, and who is experimenting with them? Here are three that I think are really important, with a couple of company examples for each one.

Time Out. It's a well-established principle that people need slack time to work through their ideas. 3M and Google, among others, have given "innovation time off" to their scientists and engineers. But most companies struggle to justify that level of slack, and aren't confident it would be well used anyway. So a more focused approach may be more worthwhile. Consider, for example, the UK software company, Red Gate. They first experimented with a "coding by the sea" initiative, where they got a bunch of volunteers to take over a beach house for a few days to see if they could make progress on a software product. This then expanded to "down tools week" which is a company-wide initiative, once a year, where everyone puts their normal routine work on hold and commits to doing something new, something a bit risky, or something that has been bugging them. There is also a "sweat the small stuff" day, once a quarter, for getting on top of the creeping bureaucracy and niggling problems that accumulate over time. These activities provide the necessary time out for employees, but with a reasonable degree of focus at the same time.

Loosely defined roles. One of the biggest obstacles to innovation is the notion of a job description — it is a sure-fire way of narrowing an employee's focus around someone else's view of what's important, and of not making full use of his latent skill-set. Truly innovative companies avoid giving people job descriptions, or they find creative ways of encouraging them to join multiple projects. For example, the UK consumer products company Innocent (famous for its healthy smoothies) asks all its employees to help deliver its vision, "to make natural, delicious food and drink that helps people live well and die old." Over the last few years, its big new product lines — including a healthy Veg Pot and its This Water line — have both come from ideas conceived and developed by mid-level employees.

Tolerance of Failure. It is axiomatic that successful innovation requires tolerance of failure. Some pharmaceutical scientists will spend an entire career working on drug development without a single one of their products reaching the market. Strange, then, that so many of our management processes, the ones that support innovation, are designed to avoid failure and to ignore it when it does happen. We can try to breed tolerance for failure through our skills as leaders of others, but we also need to find ways of institutionalizing this approach. Here are a few examples: Tata Group's annual innovation awards include a category, Dare to Try, for the best failed attempt at innovation. Advertising agency Grey has a Heroic Failure award in similar vein. HCL Technologies has a prestigious leadership development program which executives have to apply for by putting together, among other things, a failure CV listing their biggest mistakes and what they learned from them.

Have you noticed a key theme that links these three principles? None of them involve idea-generation schemes. Rather, they are all about translating ideas into action. In my view, many companies get distracted by the allure of new ideas, and they forget that the hard part is taking those ideas and putting them to work. That is where the real progress is to be made.

Do you have ideas or case studies to share on how to make innovation an everywhere, all-the-time capability? Please enter the "Innovating Innovation" Challenge, the first leg of the 2012-13 Harvard Business Review/McKinsey M-Prize for Management Innovation.

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